How equity release could help fund your retirement
PICTURE your retirement. Do you imagine yourself enjoying more holidays, spending time with friends and family, or finally purchasing the motorhome you’ve been dreaming of? You can do whatever you like, whenever you like. You’ll never dread Mondays again.
Sounds great doesn’t it?
But what if you would need to supplement your retirement finances to achieve these things - or you want to make improvements to you home but can't afford it? Equity release could help fund your retirement.
It allows you to access the money tied up in your home, either as a lump sum or smaller amounts over time and could be a possibility if you’re a homeowner aged 55 and over.
What are my retirement funding options?
The state pension is a vital financial foundation for older age.
On top of that, some of us will have a workplace pension and or private pension.
This retirement fund may not provide all the income or lump sum of cash you’d hoped for though - but you have options to help supplement these finances.
One thing to consider if is you are eligible for any government grants or benefits from your local council.
Many people choose to downsize in retirement or rent out an extra bedroom to a lodger for some extra income if they have space.
For people who want to stay in their homes and not host a lodger, they could access the cash tied in up in the value of their property, known as their equity, to help them fund their plans.
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What type of equity release is good for you?
Equity release may involve a home reversion plan or lifetime mortgage which is secured against your property. With a lifetime mortgage, the most popular form of equity release, you still maintain 100 per cent home ownership.
To qualify, your property must be worth at least £70,000. The maximum amount you can borrow will depend on your property’s value and the age and health of the youngest homeowner, who must be at least 55 years of age. Once you’ve repaid any existing mortgage, which is a condition of equity release, the money is yours to enjoy spending.
The loan and the accrued interest is paid off when you die or move into long term care. No debt is passed on to your loved ones and your estate will never owe more than your property is worth when it is sold as there is a no negative equity guarantee on all plans approved by the Equity Release Council.
It doesn’t stop you moving house either, as depending on lenders criteria you may be able to take the plan with you when you move.
There are different features with equity release plans, so it's worth doing your research and getting advice, which is required before proceeding with equity release.
Age Partnership are an equity release adviser who can give you advice on if equity release could be right for you, or if an alternative option could be more suitable. They can explain the features and risks of equity release and, if it's is right for you, they can provide you with a personalised recommendation.
These are big decisions and equity release might not suit your individual circumstances.
Taking a loan against your home will reduce the value of your estate and impact funding long-term care.
It could also affect any current or future means-tested benefits you may receive, so it is crucial to talk everything through with an expert first.
READ MORE ON EQUITY RELEASE
If you're hoping to learn a bit more equity release, here are some more of our handy guides and explainers for you to read:
- What is equity release and how does it work?
- What are the pros and cons of equity release?
- How can I fund my retirement?
- Equity release for home improvements
- 4 Little known truths about equity release
- Could equity release be right for you?
- Drawdown equity release plans
- Understanding equity release
Age Partnership provides its initial advice for free and without obligation.
Only if you choose to proceed and your case completes would a typical fee of £1,895 be payable. Other lender and solicitor fees may apply.
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Age Partnership is a trading name of Age Partnership Limited, which is authorised and regulated by the Financial Conduct Authority. FCA registered number 425432. Company registered in England and Wales No. 5265969. VAT registration number 162 9355 92. Registered address, 2200 Century Way, Thorpe Park, Leeds, LS15 8ZB.